Jan. 31 (Bloomberg) -- The Australian and New Zealand
dollars rallied from one-day declines as Asian stocks advanced
after European leaders signaled they’re taking steps toward
resolving to the region’s debt crisis.

The so-called Aussie gained versus most major counterparts
after Greek Prime Minister Lucas Papademos said he’s “strongly
committed” to reaching a debt-swap accord. The currency also
rose after a gauge of Australian business confidence climbed to
a seven-month high. New Zealand’s dollar climbed against 15 of
its 16 most-traded peers after a report showed home-building
approvals rebounded in the nation.

Papademos’s comments “show that something is happening,”
said Lee Wai Tuck, a currency strategist at Forecast Pte. in
Singapore. “There are still buyers on dips and that’s why the
Aussie is being supported, but I still prefer to sell on
rallies.”

The Aussie is set for a 4.1 percent advance against the
dollar this month, while its New Zealand counterpart is headed
for a 5.9 percent gain. The MSCI Asia Pacific Index of shares
rose 0.3 percent today.

More Greek Austerity

Papademos said major progress had been made in debt-swap
talks with bondholders. Representatives of the European
Commission, the European Central Bank and the International
Monetary Fund, collectively known as the troika, want more
fiscal tightening and wage cuts, he told reporters in Brussels.

A confidence index in Australia was at 3 last month from 2
in November, according to a National Australia Bank Ltd. survey
of about 400 companies from Jan. 9-13 that was released in
Sydney today. That was the highest since May.

“To some degree, it does confirm that the Australian
economy is still in reasonably good shape,” Paul Bloxham, chief
economist for HSBC Holdings Plc in Sydney and a former central
bank official, said in an interview on Bloomberg Television’s
“First Up” with Susan Li.

Rate Cut Bets

“The Reserve Bank certainly has the option to cut interest
rates,” Bloxham said. “These sorts of numbers tell them that
they may not be in a rush. We still think that on the margin
they will decide to cut rates” at the bank’s Feb. 7 meeting, he
said.

Traders see a 60 percent chance that the RBA will lower
borrowing costs by 25 basis points when policy makers gather
next week, cash rate futures show. Australia’s benchmark rate is
currently at 4.25 percent after back-to-back reductions at the
central bank’s last two meetings.

The Australian dollar has appreciated 2 percent in the past
month, while its New Zealand counterpart gained 4 percent in the
same period, according to Bloomberg Correlation-Weighted
Indexes. The two currencies are the best performers among the 10
developed-nation peers tracked by the gauge.

New Zealand home-building approvals increased 2.1 percent
in December from the month before, when they dropped a revised
6.2 percent, the statistics bureau said in Wellington today. The
median estimate of economists surveyed by Bloomberg News was for
an 8 percent gain.

Lending to households in the South Pacific nation rose 0.1
percent in December, according to central bank figures. Lending
growth was 1.1 percent from a year earlier, compared with 1
percent in November, which was the slowest pace since records
began in 1991.